By VG Cabuag, David Cagahastian, Bianca Cuaresma, Mary Grace Padin, Jovee dela Cruz, Lenie Lectura, Jonathan Mayuga, Recto Mercene, Cai Ordinario, Catherine Pillas & Joel R. San Juan
IN 1861 Miss Havisham expected to be laid on a long table inside her house of old brick behind iron grills in London in Charles Dickens’s fictional work. In 2016 a long table of great expectations confronts Davao City Mayor Rodrigo R. Duterte.
According to University of Asia and the Pacific School of Economics Vice Dean George Manzano, a pot is always filled to the brim with good-policy prescriptions.
Manzano first pointed to increased investors’ confidence with policies that are investor-friendly as a desired outcome.
He explained in an electronic mail to the BusinessMirror these policies and outcome include rule of law, sanctity of contracts, transparency of process, and liberalized investment regime.
“Peace and order has been his [Duterte’s] battle cry from the beginning,” Liberal Party (LP) Rep. Alfred Vargas of Quezon City told the BusinessMirror. “I expect a lot of reforms in a Duterte administration.”
LP Rep. Teddy Baguilat Jr. of Ifugao, citing Duterte’s strengths and talents, said he is expecting the next president to “focus his efforts on his own popular promise of fighting criminality—not even to eradicate it, but to minimize lawlessness.”
“Then inasmuch as he said he’ll be bringing in the Reds and the Muslim separatists to the table and, being a Mindanaoan, I hope he really negotiates a lasting peace settlement that will end all internal wars in the Philippines,” added Baguilat, House Committee on Agrarian Reform chairman.
Environmental activists, meanwhile, are calling for blood.
Activists grouped by the Kalikasan-People’s Network for the Environment (Kalikasan-PNE) said they want the “Punisher,” president-elect Duterte, to act with dispatch.
The group, a vocal critic of the Aquino administration’s environmental programs and policies, wants Duterte to make good his campaign promises by going after environmental criminals and alleged corrupt government officials.
The group said it wants Duterte to begin investigating and prosecuting Department of Environment and Natural Resources (DENR) officials led by Secretary Ramon J.P. Paje. The activists alleged the Aquino administration’s National Greening Program (NGP) is “anomalous.”
Kalikasan-PNE also wants Duterte, who vowed to fight crime and corruption to ban aerial spraying (referring to the method used by large agricultural corporations in banana and pineapple plantations) and large-scale mining on all cities. The group also wants the prosecution and detention of suspected killers of environmental activists, like botanist Leonard Co.
Greenpeace Philippines, meanwhile, expects a handful, beginning with helping the Commission on Human Rights (CHR) pursue cases against big corporate polluters. The group listed six other expectations.
Other environmental groups are also asking Duterte to promote renewable energy, cancel all 27 coal-fired power plant projects in the pipeline and phase out the 19 existing power plants that run on coal.
“[President-elect] Duterte must review the current one’s commitment to reduce 70 percent of our country’s emissions by 2030,” said Ruel Cabile, national coordinator of Aksyon Klima Pilipinas. “His administration must also demand climate finance from developed countries, as well as mobilize its own resources, so it can implement a swift and just transition to clean and renewable energy.”
Energy mix
LOPEZ-led First Gen Corp. officials are urging the new administration to come up with a clear policy on energy mix.
“Right now, an energy mix is going to be an important policy. The government has got to be able to make strong moves toward making sure that it’s not just the cost that drives our fuel mix, because that is what’s happening today,” First Gen Chairman Frederico Lopez said in an interview.
When asked what would be an ideal energy mix for the country, Lopez replied, “If we can head toward 50-percent renewable, for starters. I think, for me, if we are able to meet the commitments we made in Paris, which is a 70-percent reduction in carbon emission, then that’s going to be a good start.”
The Department of Energy (DOE) is pushing for the industry to source 30 percent of its energy requirements from coal, 30 percent from renewable energy and another 30 percent from natural gas. The remaining 10 percent will come from oil-based power plants.
Based on latest DOE data, the country’s total installed capacity stood at 18,695 megawatts (MW). Dependable capacity, meanwhile, stood at 16,451 MW.
Of the installed capacity, coal-power plants make up 31.5 percent, while oil-based and natural gas-fired plants account for 19.3 percent and 15.3 percent, respectively.
Data indicated that the share of renewable-energy sources, such as geothermal, hydro, wind, solar and biomass, stood at 10.3 percent, 19.3 percent, 2.3 percent, 0.9 percent and 1.2 percent, respectively.
Renewable energy
OFFICIALS still working under the administration of President Aquino appear to agree with some of the expectations of environmental activists.
“Renewable energy is high on the agenda to maintain the country’s momentum,” Energy Secretary Zenaida Monsada said. She continued that “we have been working on inputs for a sound decision, so that the next administration has a solid basis for decision-making or direction with the updating of the Philippine Energy Plan, Power Development Plan, Transmission Development Plan and Distribution Development Plan.”
Meanwhile, the Inter-Agency Task Force on Securing Energy Facilities, which is led by the DOE, is “strongly” pushing for the passage of a binding law that will prohibit any activity compromising the integrity of grid regarding the obstructions beneath the transmission facilities, such as vegetation and structures.
Monsada said this will form part of the recommendations of the agency for the incoming administration.
Other policy recommendations that will be provided for the next administration include matters pertaining to the Electric Power Industry Reform Act, such as the Retail Competition and Open Access, Competitive Selection Process for power-supply contracts, establishment of Wholesale Electricity Spot Market in Mindanao, Renewable Portfolio Standards, RE Market and the Green Energy Option. Furthermore, the DOE would also push for the 30-30-30 balanced energy mix (renewable energy, coal, and gas), wherein the remaining 10 would include an open option for nuclear energy and other alternative energy.
For the fuel sector, Monsada said she hopes “to strengthen implementation of the retail rules to fully eliminate the bote-bote scheme, and illegal refilling of liquefied petroleum products to deliver an orderly competition.”
Finally, the DOE would recommend energy-efficiency policies, starting with energy labeling for industries and transportation.
Miners hopeful
MEANWHILE, with Mr. Aquino out of the picture, mining industry’s big players under the Chamber of Mines of the Philippines (COMP) are hopeful of better days ahead, starting with the repeal of Executive Order (EO) 79.
Mining, a highly extractive industry facing stiff opposition from communities and environmental groups, continues to face an uphill climb, with mining investment experiencing sharp drops over the past few years because of EO 79.
The Philippines is blessed with rich mineral resources and, despite its potential, its contribution to the country’s GDP is still less than 1 percent, because of existing policies that prevent minerals development to take off.
The COMP is preparing for a more detailed “wish list” for the tough-talking Duterte, who promised to suppress crimes, fight graft and corruption, and “fix” the government.
While at it, the COMP issued a list of recommendations drafted by Nelia Halcon, the group’s executive vice president.
According to the COMP, EO 79 effectively suspended the issuance of new mining permits until a new law on the revenue-sharing scheme between the government and mining industry is enacted.
It also established mining “no-go zones,” making 86 percent of the country’s total land area “off-limits” to mining, diminishing the right of exploration-permit holders from an “exclusive right to an MPSA or other mineral agreements or FTAA” (under RA 7942) to a “first option to develop and utilize the minerals in their exploration area.”
Under the presidency of Duterte, the COMP is recycling its wish list, which it believes will boost the industry through the creation of a mineral resource-development policy to create a stable investment and regulatory environment, and ensure the responsible exploration, development and utilization of mineral resources to benefit the country and the people.
Foundation laid
Communications Secretary Herminio B. Coloma Jr. said aside from the anticorruption drive, the Aquino administration had also laid the foundation that will enable higher economic growth in the next six years under Duterte.
Coloma said the continuity of these projects, especially those aimed at minimizing corruption, should be done to take advantage of the Aquino administration’s accomplishments in these areas.
“In my opinion, if we look at it closely, in the main, the platforms being pushed by the Aquino administration were also identified as the focus of the next administration,” Coloma said. “We must admit the reality that not everything can be resolved or eliminated during just one six-year term.”
Some of the anticorruption measures instituted during the Aquino administration are the establishment of the Governance Commission on Government-Owned and -Controlled Corporations (GOCCs), which scrutinizes the operations of GOCCs which have long been perceived to be a haven for corruption, inefficiency and nepotism, and the use of the annual General Appropriations Act as the actual release document for appropriations, obviating the need to secure a special allotment release order from the Department of Budget and Management, which is an additional red tape that also encourages corruption and political patronage.
On the part of the Judiciary, the Supreme Court uprooted the deeply embedded practice of giving legislators their lump-sum pork barrel which, until recently, they were given the discretion to spend as they choose, often for pet projects chosen based on the political gain they would bring for their future political plans.
The Duterte administration could capitalize on the government’s achievements in fighting poverty and crime to gain headway “when they hit the ground running” on June 30, according to Coloma.
Warm welcome
THREE days after the elections on May 9, local markets gave the new administration a warm welcome after closing on a positive note.
On Tuesday, a day after the national elections, the Philippines’s financial markets reacted positively, with both the stock index and the foreign-exchange market ending the day’s trade on a positive note.
Data from the Philippine Dealing System (PDS) showed the peso appreciating on Tuesday to 46.76 to a dollar. The strength of the peso extended further on Wednesday as it hit 46.55 to a dollar, or 20 centavos stronger than the previous day’s close.
Among the crucial developments investors are awaiting from the front-runner are his choices of Cabinet secretaries, as well as his fiscal plan for the country, according to ING Bank Manila senior economist Jose Cuyegkeng.
“The Philippine peso’s post-election day strength could be sustained with further positive developments from President-elect Duterte,” Cuyegkeng said. “We expect Duterte to form his government in the next few weeks while focusing on key priority areas.”
Cuyegkeng added that the selection of members of his Cabinet would be important developments.
“Discussions about the 2017 budget would start by end of May or early June. This would help us assess Duterte’s fiscal stance. Market-friendly actions would help sustain Philippines’s strength or moderate the impact of challenging external developments,” Cuyegkeng added.
Close monitoring
ON the international front, major credit watchers remain cautious of the next president’s first steps in setting the tone for the economic environment.
In a recent study on the sovereign risk of politics in Southeast Asia, Standard & Poor’s (S&P) Ratings Services said Duterte’s style posts risks to the country should changes in his administration become too aggressive.
“Used to a hands-on approach in governing a city that is his political base, he could take some time getting used to the many compromises required in the national leadership position. Some measures he is considering could change the status quo, including liberalizing the telecom sector and constitutional amendments to strengthen the power of local governments,” S&P said.
“He could face strong resistance if he pushes some of these changes aggressively,” the ratings agency added.
Fitch Ratings, meanwhile, said it continues to “wait-and-see” developments on the ground before giving a full assessment of the administrative transition.
“However, when the rating agency affirmed the rating at ‘BBB-’ with a positive outlook in April, the agency had pointed out that it would wait and see whether the improvement in governance standards achieved under the administration of Aquino can be sustained after the 2016 elections, in line with its rating sensitivities,” Fitch said.
“If that were to occur, it could be positive for ratings. Fitch will monitor further developments closely,” it added.
Manzano told the BusinessMirror these policy recommendations will all boil down on how Duterte would perform.
“What is lacking is implementation of policies.”
‘Wish list’ of National Renewable Energy Board
NATIONAL Renewable Energy Board (NREB) Chairman Pedro Maniego, in a text message to the BusinessMirror, wants the new administration to focus on the following:
- Set an energy policy based on distributed generation rather than centralized generation, which would lead to a more robust and resilient grid, as well as to lower transmission costs and losses;
- Conduct a comprehensive study to determine the appropriate power mix to meet base-, midmerit- and peak-load demands;
- Develop and implement the Philippine Energy and Power Development Plans according to the distributed generation policy and results of the power-mix study;
- n Level the playing field between fossil-fuel plants and indigenous renewable-energy resources by strictly implementing the Clean Air Act, Water Code and other environmental laws, and by removing the automatic pass-through of fuel costs to consumers (this provision ensures the profits of fossil-fuel plants by shielding them from price fluctuations);
- Full implementation of the mechanisms and incentives under the RE Act of 2008;
- Fast-tracking of the approval and permits for renewable-energy projects at all levels; and
- Appointment of a Department of Energy secretary who has an in-depth knowledge of the energy sector, and has the right experience and educational background.
- The NREB is the body tasked by the Renewable Energy Act of 2008 to recommend policies, rules and standards to govern the implementation of the law, which granted fiscal and nonfiscal incentives to renewable-energy projects.
Image credits: AP/Aaron Favila